Financial Engineering to Accelerate Link

Sound Transit CEO Peter Rogoff has suggested the agency is exploring creative financing options for Everett Link that shift some costs outside of agency debt limits. If successful, this would mitigate the risk of project delays as Sound Transit bumps up against statutory limits on debt in the 2030s, and may even accelerate the timetable.

“Our goal in terms of being able to serve Everett sooner is two-fold. One, to work with the communities as cooperative partners to see if we can’t focus on results and minimize bureaucracy to get a plan to get up here as soon as we can. That’s A. B, if there is a way that we can work out a financial arrangement where we could start incurring costs for this that would be exempt from the debt cap imposed on us, that might provide some opportunities to get up here sooner. We’re trying to be as creative as possible.

We’ve made that commitment to not only Paul Roberts, to Dave Somers, to Dave Earling, who’ve been on this for a long time. I don’t want to say it’s impossible. I’d like to continue with each passing year to see if we can’t drive that schedule closer and closer.”

Sound Transit, like any local government in Washington State, faces a constitutional limitation that non-voted debt not exceed 1.5% of the assessed value of property within its jurisdiction. This constrains the size and timing of capital investments as revenues must accumulate to cover most of the program. At its peak, the financial plan envisions $17.6 billion in debt by 2035, just as Everett Link is scheduled to open in 2036. The debt limit in 2035 is projected at $20.1 billion. There are many risks to that forecast, starting with the inescapable vagaries of a financial forecast two decades into the future. MVET reform alone could erode almost all of Sound Transit’s cushion unless accompanied by offsets. Several billions of anticipated federal grants are uncertain. Community pressures may drive some project costs higher.

We asked Sound Transit to elaborate on the options to spend beyond the debt cap, and Sound Transit spokesperson Kimberly Reason explained:

Sound Transit is investigating opportunities to leverage public-private partnerships as we deliver our capital program and operate the system as it grows. Everett Link is one of several potential P3 applications, but we are still investigating this and no conclusions or decisions have been made yet. Our investigatory work will continue at least through the end of this year. The Executive Committee was last briefed on status of the work in February, and will be briefed again following completion of our exploration.

The February briefing to the Board described a wide range of P3 alternatives. Two illustrative options suggest the financial implications. In one simple scenario, a private partner could build the rail line and stations, then lease them back to Sound Transit, perhaps with the facilities reverting to Sound Transit ownership after a lengthy period. The transaction would be profitable for the private partner because the lease payments would cover the cost with interest of building the line, along with some margin for assuming the financial risks.

A more comprehensive partnership might encompass both construction and operations, with an operations contract designed to make the private partner whole over time for both capital and operations costs.

In either case, the debt would be owned by the private partner. For Sound Transit, the adjustments to net outlays would be roughly a wash. More lease payments or fees for operations, but correspondingly less debt repayment. P3s are often complex to administer because the contract must anticipate so many future contingencies. It may nevertheless be appealing to the Board because a debt re-engineering means more financial flexibility.

The debt cap also means that project delivery timelines in one subarea are sensitive to cost overruns or scope creep in others. In response to a question from Paul Roberts about escalating scope on the West Seattle and Ballard projects, CEO Rogoff explained:

You’re right to identify that. You heard me make reference to the debt cap. The board must manage our finances to make sure they are continually affordable. That creates some peaks and valleys in terms on when we can take on debt. If we spend too much money in the early years, we could run into debt cap problems in the outer years. Importantly, it was not a coincidence that we put our Board Chair Dave Somers, the Snohomish County Executive, on the elected leadership group that is working on the alignments for the West Seattle/Ballard extension project.

In the elected leadership groups, there also needs to be a certain degree of fiscal discipline, because there is a budget for each one of these projects, and we have to make sure that they either stay within budget or, as we have for partnering agreements with certain of these cities, that there’s going to be considerable betterments and considerable cost growth, there needs to be third party funding to make that happen. I think, from his public comments, on the Elected Leadership group for West Seattle and Ballard, that Executive Somers understands that’s a very important role that he has in that group. We are doing this with every other elected leadership group, not just getting the elected leaders on the projects in the room, but making sure there is at least one Sound transit board member who doesn’t have a dog in the fight to maintain some fiscal prudence in the conversation.

Comments

A good solution to the cash flow problems imposed by the state’s bonding limits. Yes, probably somewhat more expensive than conventional financing, but if it gets the line in operation a lot quicker, a reasonable tradeoff.

The biggest problems with P3s have been when the government partner under-specs things (looking at you, Canada Line 150 foot platforms).

Denver’s P3 has been relatively successful except for issues with their PTC/crossing gates software. But the private operator ended up on the hook for those problems financially.

I’d give Denver’s P3 a “barely adequate” instead of “successful.” While the crossing gate issue is finally almost resolved after two and a half years, it’s delayed opening of the G line, which was fully built almost two years ago but only just received the go-ahead to start testing trains last week! There have been a lot of other issues, including:
•Poor route design with several sharp curves near downtown, and extensive single-tracking near the airport
• The contractor cheaping out on lightning protection, causing a ton of delays early on
• RTD and the contractor suing each other over a multi-year delay on the N line
• Hundreds of of people stuck on a disabled train for multiple hours a few months ago
• Lots of small delays for signal issues, middle-of-the-day maintenance, and mechanical problems, per the @ridertd twitter account

Overall it’s been a huge improvement over the previous level or service, and usually works well in my experience, but the contractors have spent the entire time trying to do things as cheaply as possible. Fortunately, a lot of these issues could potentially have been avoided with better specs and supervision from the government agency.

a) Good reporting Dan, many thanks for picking up on this. It’s really important folks in ALL the subareas recognize the debt limit is the debt limit. So fellow transit activists please don’t be asking for statues of our heroes, mega-garages or ridiculous Link deviations.

b) I really think considering the Snohomish County business & political elite are pushing – no shoving – not a reasonable spur to Paine Field like TransLink’s SkyTrain does to Surrey (and quite possibly in the next 25 years Langley) with decent-sized paid parking (I’ve walked around the walkshed of several of the spur’s stations, not just rode the SkyTrain) but a full spine deviation that some or all of that deviation be done by public-private partnerships. Seems to me the enthusiasm is there to give that a go… and would help with the Sound Transit debt limit plus speed up ST3 project completion.

c) The rest of the Everett City Council video is well worth a listen. Talk of redeveloping downtown Everett, and then some talk of Everett Transit’s financial & transit net reforms. Big open house this Thursday at 6 PM, Everett Station about ’em too.

The Paine Field deviation makes little sense from a rider perspective. The one or two stations planned near Paine Field are not within walking distance to most of the major employment locations in the area. Because it is the employer end of a trip, adding a parking garage won’t help.

I think there is an awful misunderstanding in Snohomish leadership about how rail transit trips work. Trips are only possible to make between stations and not anywhere on a line. Light rail lines are not freeways or arterials or even bus routes! Their view comes from being in a position of power after a lifetime of driving (and never living with the actual reality of daily rail transit use).

Having said that, Snohomish could benefit so much more from a cheaper and cheaper local line technology (streetcar?) that has multiple stations along the Paine Field alignment yet gets regional travellers to and from Everett faster on the Link trunk.

Of course, the best way to build a relatively unproductive alternative is to lock in funding as part of a larger regional effort (ST3), and then to structure its contracting to make questioning its utility almost impossible (P3). That’s what seems to be happening here as many of those leaders vaguely know in their gut how extravagant and wasteful the deviation is so they seem to wish to be naive about it all.

The other dilemma is however how to keep the costs down. If fare revenue is part of the deal, many savvy P3 firms will price it high. I expect any P3 deal to ultimately ignore fare revenue as part of the contract for this reason.

The Paine Field deviation makes little sense from a rider perspective. The one or two stations planned near Paine Field are not within walking distance to most of the major employment locations in the area. Because it is the employer end of a trip, adding a parking garage won’t help.

The plan is most will transfer to a Boeing shuttle or Community Transit or Everett Transit bus to get to their final destination. Should work just fine, that’s how TransLink uses its bus lines – to feed and feed from the SkyTrain.

As to;

Snohomish could benefit so much more from a cheaper and cheaper local line technology (streetcar?) that has multiple stations along the Paine Field alignment yet gets regional travellers to and from Everett faster on the Link trunk.

I wanted gold-plated BRT. Only three Sound Transit staffers and some Joe were enthusiastically publicly supportive and the courageous plan died in the Ruth Fisher Boardroom in early June 2016.

As to streetcrawlers, uh no. Not going to work for the distances involved. Plus it’s mostly municipalities – not transit agencies – that pay for them and in case anybody hasn’t noticed, the City Government of Everett is cutting back on spending and in my blunt personal opinion underfunding, underappreciating Everett Transit.

Finally, as to…

Of course, the best way to build a relatively unproductive alternative is to lock in funding as part of a larger regional effort (ST3), and then to structure its contracting to make questioning its utility almost impossible (P3). That’s what seems to be happening here as many of those leaders vaguely know in their gut how extravagant and wasteful the deviation is so they seem to wish to be naive about it all.

I have to say I wouldn’t be that cynical but I sure think this deviation and not a spur came about when ST3 was up-sized. Some people in positions of influence lost and keep losing sight of the main objective – which is to get high capacity light rail to Seaway Transit Center & Everett Station ASAP.

Sometimes I personally think parts of ST3 were literally drawn up as elite projection. Elite projection being as Jarrett Walker wrote, “Elite projection is the belief, among relatively fortunate and influential people, that what those people find convenient or attractive is good for the society as a whole. Once you learn to recognize this simple mistake, you see it everywhere. It is perhaps the single most comprehensive barrier to prosperous, just, and liberating cities.”

Yup. That’s the case with the West Seattle line – the general public isn’t exactly clamoring for it over there. That’s the case with the Paine Field deviation, not a spur modeled on SkyTrain. I can go on but won’t….

I have to say that Jarrett’s “elite projection” transit comment describes the ST3 measure and current ST planning to a tee! That’s because the “Seattle process” inherently gives stakeholders and activist residents a voice much louder than the riders! Even at public meetings, mitigation to neighborhoods sucks up all the energy and when rider improvements get mentioned the staff and other observers look irritated.

Riders (and drivers and other field staff) have very valuable insights that seem to get shoved away. Why else would a group get to push an “elite” alternative that cost hundreds of millions to go deep under Union Station but not fund a more modest $20M or so stacked cross-platform transfer at SODO? That’s a very classic “elite projection” too.

As to, “I have to say that Jarrett’s “elite projection” transit comment describes the ST3 measure and current ST planning to a tee! That’s because the “Seattle process” inherently gives stakeholders and activist residents a voice much louder than the riders!”

Well I’m all for changing the Sound Transit Board so we have meetings at a better hour. This having hearings on the TDP at 12:30 PM and afternoon rallies, er, meetings on getting ST3 thru I gotta say was fun for me. I can see very easily where others who’d want to attend didn’t want to literally spend a vacation day with the likes of a certain Alex, Joe the 12 for Transit, a bunch of red shirts, and the Seattle media.

“Even at public meetings, mitigation to neighborhoods sucks up all the energy and when rider improvements get mentioned the staff and other observers look irritated.”

Examples please. I sure want to make damn sure riders get priority and not well, you know…

Al, and everybody, know I’ve used this one before, more than once. I got a ride or two on it when I was around eight.

Buy for me, it’s probably most impressive example of street rail transitioning into rail much heavier than LINK. One section was an actual restaurant. Street rail connection- and my own definition of “Light Rail”, is that it can run streetcar track if and when it has to.

Extreme measure for a desprate time. This really was the end of the Chicago and North Shore Railway, before it was killed by both diesel commuter trains and, of course, cars and freeways.

In all seriousness, streetcars really can’t share trackage with LRT, at least, not without a lot of technical folderol. They’re significantly narrower than modern LRV’s and as a result can’t have step-on-step-off stations without gantlet track.

Also, you can’t have “stacked, cross-platform transfers”, unless you have each line separately “stacked”. If you do that you then have a level-change for reverse-direction transfers.

Given that West Seattle will never have frequency greater than six minutes (there just aren’t enough people out there), and Rainier Valley is limited by the need of cross-traffic to a minimum headway of six minutes, running both the Red Line and the Green Line on the same tracks is the right answer. Now, to accomplish this without having a level-crossing just to the south means that the station has to be about thirty-five feet above the roadway with a scissors deviation to the south of the station such that the one direction drops to the drops to the elevation of the current curve by the Franz Bakery and the other rises high enough to clear the “through” line to the south. That’s about fifty feet above ground, and certainly a monumental structure, but doing that allows in-line transfers at SoDo to be at the same platform and reversing transfers (e.g. West Seattle to RV/Airport/Tacoma or the other direction) to be cross-platform.

Even if a “Duwamish Bypass” is built branching from the Red Line at the Spokane Street Curve, it won’t run more often than every six minutes either, making for a combined headway between SoDo and Stadium of two minutes. LRT can certainly handle that.

Well here are some observations from the West Seattle meeting in March(?):

All boards show alignments and lines for platforms but not stations themselves. That points to issues like tunneling and station locations but doesn’t show how each alternative station could conceptually be laid out. That turns the discussion to mitigation.

No three dimensional pedestrian access was shown. Will a rider have to walk or down hill to get to an entrance? Citizens don’t get that info.

Where will feeder buses run? Will stations be set up well for transfers? Again, it’s simply info not presented. No Metro rep is there because it’s an ST meeting.

How will stations drop-offs be handled? How about bicyclists at stations? There aren’t any access typololgies presented for these things.

All of that is on top of the whole rail-rail transfers being featured in a “How Will Rail Riders Transfer?” board.

And on top of “How Crowded Will My Train Ride Be?” board.

There isn’t even a board asking participants which station is closest to their home or how they will access the station.

It’s conpletely designed as a mitigation mindset.

Then, when many savvy people start asking about rider issues, a powerless staff member is left saying to “write it down” but not engage participants in addressing the issues.

Thus, the process is all about mitigation to neighborhoods from the minute someone walks in. The project was presented as an intrusion and not an opportunity. If the theme is about resident fears rather than rider convenience, it’s hard to rewrite the script.

>> I think there is an awful misunderstanding in Snohomish leadership about how rail transit trips work.

Yes, I agree. Unfortunately the same problem exists in Pierce and to a lesser extent King county. Oh well.

The problem is that Everett is neither close enough, nor densely populated enough to justify a massive investment in light rail. It is not a high density, nearby suburb, like many found in the East Coast. Nor is Everett a big city that just happens to be within an hour of a bigger one, like Baltimore. It is simply a small, low density city fairly far away from a mid-size one.

The so called deviation (to Paine Field) is based on the latter idea — that Everett is big enough to justify light rail regardless of the distance to other cities. But the other idea (that Everett is a nearby high density suburb) is just as nuts. It is simply too far, and there aren’t enough people to make that work. It really doesn’t matter how you get to Everett — it was bound to be a bad value. Of course there will be riders — enough for some to pat themselves on the back and declare victory — but either way it will be a tremendous waste of money.

Joe is right — it would have made way more sense to spend a bundle on BRT. Spend half the money on right-of-way and buses and you would have a better outcome for riders. As folks have mentioned, you will have to make a transfer anyway (to get to work places close to Paine Field). You might as well make that transfer in Lynnwood. Meanwhile, there are thousands upon thousands of people who stream in from north of Everett every day, many of whom are headed to Everett itself (or some other place in Snohomish County). Most drive their car. Those that ride the bus have to endure a terrible commute, as the HOV lanes end right in Everett. The termination of the HOV lanes there also causes backups felt as far away as Seattle. Thousands of two person cars (and a handful of buses) have to merge out of the HOV lanes, and into a general purpose one. That was less of an issue twenty years ago (when Marysville and surrounding areas were much smaller). But it is a big problem now, and the singular focus on only one direction (south) really won’t do much to address the transit problems in that area.

It is quite possible that the leaders are clueless. It is also possible that some of them know all this. They didn’t promote the spine because they felt it was a great investment in public transit infrastructure, but rather as a way to spur development. A huge public works project to put their city on the map. Rail bias is real (especially when it comes to civic leaders) and saying you have the best bus system in the U. S. for a city your size just doesn’t have the same cachet that having rail does (especially when the rail is fast and big). But if the improvements are mostly symbolic — if they don’t address the fundamental public transportation problems in Snohomish County — then I really doubt they will lead to the type of development the leaders want. Oh well.

Given that West Seattle will never have frequency greater than six minutes (there just aren’t enough people out there), and Rainier Valley is limited by the need of cross-traffic to a minimum headway of six minutes, running both the Red Line and the Green Line on the same tracks is the right answer.

Yes, I agree. Then have another split at the UW, where ridership north of there (on each line) is roughly half of that to the south. Six minute headways to Lynnwood, six minute headways to Ballard. Fairly simple, really.

That still means we are serving West Seattle before Lower Queen Anne and South Lake Union. As it is, we are serving West Seattle before Belltown. It also doesn’t address the fundamental problem with West Seattle rail. Stops will be added, but there will be very few who will ride from one to the other. Transfers from buses will occur very close to a freeway (the fastest part of their journey). As with Everett, the value added for this massive investment in rail will be tiny, but if we connected the lines, at least the investment wouldn’t be so massive. That would allow for an investment (or at least a down payment) in say, a line from Ballard, Lower Queen Anne, Belltown, Westlake, First Hill, Yesler, Judkins Park, and Mount Baker. Not necessarily what I would build (especially not in that order) but certainly better than what we are building.

I doesn’t sound like the have considered asking the voters for bonding capacity. There is a steep learning curve for P3’s. I would hate to see ST get Screw though poor contracting before they try to keep it in house.

I’d rather do P3s than an election campaign at this point. P3s have been around long enough to download & apply best practices to address your legit concern of Sound Transit taxpayers & riders suffering “through poor contracting” and “a steep learning curve”. Respectfully.

Trust me on this: You do not want Sound Transit on the ballot before at least 2024… especially if you want other Puget Sound transits to have ballot measures at the same time (I do!), and with Sound Transit getting smacked around in the media so much. ST3 was very much a close run deal…

The problem is that it’s not just asking the voters for the bonding capacity, it’s that you have to get 60% of the vote to exceed the limit. Forward Thrust was a bonding-heavy approach that required a supermajority and it failed twice. I can’t see ST doing any better. (ST2 getting 58% in a huge blue wave election is probably the high water mark)

Not to mention, Sound Transit on the ballot again so soon will take oxygen away from other transits seeking to get on the ballot and win. Remember most folks get their news from Seattle-based outlets. I don’t want the latest lamestream media attack on public transit (perhaps fanned by the condescension of mostly female anchors who feel unsafe using transit at midnight for understandable reasons as female public figures – I’ve reached out to them via Twittah) to sink say Skagit Transit or Intercity Transit.

Sound Transit is going to have to make do with ST3 levels of funding, period. A P3 is not going to be the end of ST3. No, having Snohomish County bureaucracy grow with a bunch of bureaucrats to build it instead of professionals can endanger ST3. Canada Line was a P3 with TransLink and although found to be too small; at least the project is safe and is the only SkyTrain line with attendants at all stations.

Sometimes you guys on the left need a wake-up call. Happy to oblige from the activist centre.

>> Canada Line was a P3 with TransLink and although found to be too small; at least the project is safe and is the only SkyTrain line with attendants at all stations.

Yeah, Canada Line is really not that bad. Compared to our line, it is wonderful. Take away the tunnel (that wasn’t built by ST) and it seems like every other station we build is flawed, while we forget to build obvious ones. SeaTac, Mount Baker, Husky Stadium all have problems. We don’t have a First Hill station, nor a station enabling a good intercept for SR 520 buses (if we did, then all of the hand wringing from the previous post wouldn’t exist). Oh, and who builds a station without stairs, then adds cheap escalators?

Meanwhile, Canada Line just needs to add trains and maybe expand the stations (it was designed to be able to expand easily to handle three car trains). Just adding trains may solve the problem. But with the combination of longer platforms and more trains, it will go from being able to handle 6,100 people per hour to 15,000. Other steps can be taken as well, like using trains with side seating, or adding additional public transportation options. Not only could you reintroduce some of the bus lines along the corridor, but the Arbutus corridor will likely eventually get light rail. This parallels the Canada Line, which means that some people who take the Canada Line today would switch to Arbutus.

The problem at this point is that Vancouver simply hasn’t spent the money to expand capacity, as opposed to the thing being built improperly in the first place. It is possible that eventually, even that won’t be enough. But at this point, even the crowding is a problem that most agencies wish they had. It is 11 miles long and carries 130,000 riders (in contrast ours is about 20 miles and 80,000 riders).

But mainly: What can ST get done before it has to borrow? Also, wouldn’t our time, attention and expense better spent figuring out alternatives that give us higher quality transit for less money? Would also like some proof that Crash of 2008 was worst of its kind. Rather than first of the next kind.

Richard, Europeans generally call anything running grooved rail with catenary overhead a tramway. So these trains in Dresden are probably natural equivalent of trucks on same streets as buses.

But doubt anybody installs them as part of a new system. Anybody wants to create an industrial waterfront from Alki to Magnolia, might think about it. Just to spite whoever signed the Benson Line’s death warrant. But I think the North Shore planned these as a farewell, rather than start of a new era.

Might advocate these as part of an attempt to create a counter-development to “sprawl”, much like fighting a range fire with a “back-fire”- new general mode of development where whatever you call this kind of railroad to substitutes for suburban traffic.

Best where there’s already an old spur line nobody wants. But no place where it would be any sweat to make it share stations or anything else that would be a detriment to LINK’s descendants. Both this one and the Electroliner grew out of a context. Which I doubt we’ll ever have.

In addition, Sound Transit should split up Everett Link into two projects. The first would be the Lynnwood to Mariner (128th SW) segment, the second the rest of the line. Why, you ask?

1. The first segment would be just under 7 miles, close to the mileage for Husky Stadium to Northgate with the same number of stations, 3.
2. It would be open well before 2036, my guess 2028, giving today’s commuters a decent chance of being around to intersect the system without enduring what will be a clog on I-5 at 164th due to no direct access ramps to and from the north (buses sliding back and forth general purpose lanes to serve Ash Way).
3. The Mariner station would offer connections to Community Transit’s forthcoming “Green” line, which would take Link passengers to Paine Field and Boeing to the northwest and Mill Creek and Bothell to the southwest.

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